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Economy in Brief

FIBER: Industrial Commodity Prices Weaken This Year
by Tom Moeller  July 19, 2013

Economic analysts suggest that GDP growth softened last quarter following its 1.8% rise during Q1'13. Recent movement in commodity prices support that conclusion. Yesterday's industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), was 163.2 and 8.2% lower than in mid-February.

Prices in the miscellaneous group have led the decline. Prices for both structural panels and framing lumber have declined by roughly one-quarter since April. Natural rubber prices have moved down as well. Prices in the metals group have been only somewhat less weak. Aluminum prices are 17.0% below the December high and are off 6.0% during the last twelve months. Copper prices have fallen a like amount since February and are down 10.0% y/y. With a 12.0% decline since April, steel scrap prices (-6.4% y/y) have been weak as well.

In the textile group, prices also have been soft. Burlap prices are down 14.0% since March and by 7.0% y/y. Cotton prices have been more stable, showing little-change since April but a one-quarter improvement y/y. Also to the upside have been crude oil & benzene prices. Crude oil prices have risen one-quarter since their November low but are still below the high of $113.93 per barrel in May 2011. Working the other way, prices for the petrochemical benzene are off 20.0% since February (-3.2% y/y).

The current industrial output forecast from the National Association for Business Economics calls for 3.1% growth this year but then a pickup to 3.5% in 2014. These growth rates suggest some future firming of industrial commodity prices. During the last ten years there has been a 42% correlation between the three-month change in prices and the change in factory sector industrial production.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.

FIBER Industrial Materials Price Index (1990=100) 07/18/13 Y/Y % 2012 2011 2010
All Items 163.2 1.1 166.4 173.0 157.9
 Textiles 77.8 2.2 77.9 86.1 81.3
  Cotton (cents per pound) 79.8 20.7 74.5 132.8 87.8
 Metals 222.2 -2.1 243.0 278.7 240.0
  Aluminum ($ per metric ton) 1,772.0 -5.1 2,019.6 2,400.9 2,172.1
  Copper Scrap (cents per pound) 314.0 -8.8 360.6 400.3 326.8
  Steel Scrap ($ per ton) 324.3 -6.7 366.7 412.6 326.5
 Crude Oil & Benzene 211.8 5.9 204.1 199.3 182.0
  Crude Oil (WTI, $ per Barrel) 106.4 18.3 94.2 95.0 79.4
 Miscellaneous 205.0 0.7 205.3 190.6 179.1
  Framing Lumber ($ per 1000 board ft.) 335 5.0 321 273 283
  Natural Rubber (cents per pound) 176.0 -13.1 211.9 262.3 182.9
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